Earlier this year we wrote a fair bit about how China was experiencing a profitless growth. But latest data shows that in October profits climbed 20.5 percent year-over-year (YoY), and sales grew 11.1 percent on the year.

Year-to-date (Ytd) industrial profits were up 0.5 percent, compared with -1.8 percent in the January-September period. This added to signs of green shoots in the economy.

Second, producer prices have been falling since late 2011, but earlier this year manufacturers were still using materials purchased last year when prices surged. Recently manufacturers used more materials purchased at lower prices.

Third, restocking by manufacturers on rebounding raw material prices and improved confidence has been leading to a faster growth in sales revenue than GDP, unlike the case in 2Q and 3Q when manufacturers ran down their inventories.

Fourth, export growth has been accelerating in the past two months as well from the trough in 3Q, which could also help boost earnings growth for manufacturers."

Ting writes that industrial profits could be a leading indicator for earnings of listed non-financial companies. Earnings for these companies were down 15.7 percent in the third quarter, and 16.8 percent in the second quarter.

Here's a chart that shows the turn around in industrial profits and its connection with earnings of listed non-financial companies:

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